Question

Which of the following statement(s) is/are true?
A. Technical feasibility is not required in case of hospital projects. 
B. Pattern of financing is ignored while computing cost of capital 
C. CPM is superior to PERT in some situations 
D. Infrastructure projects are ideally financed through long term sources. 
E. Cost of internally generated funds is zero. 
Choose the correct answer from the options given below:

• A. B, E only
• B. D and E only
• C. A and B only
• D. C and D only

Answer 1

The Correct Option is D

To determine which options are true, let's analyze each statement individually:

1. A. Technical feasibility is not required in case of hospital projects.

   This statement is false. Technical feasibility is a fundamental aspect of any project, whether it's related to hospitals or any other field. It assesses whether the project can be completed technically with the available resources and technology.

2. B. Pattern of financing is ignored while computing cost of capital.

   This statement is false. The pattern of financing influences the cost of capital because it considers the proportion of debt and equity, which have different costs associated with them.

3. C. CPM is superior to PERT in some situations.

   This statement is true. The Critical Path Method (CPM) and the Program Evaluation and Review Technique (PERT) are both project management tools. CPM is often considered superior in situations where project activities are well-defined and there is a need for scheduling and time control. PERT, on the other hand, is used when there are uncertainties in the project durations.

4. D. Infrastructure projects are ideally financed through long-term sources.

   This statement is true. Infrastructure projects usually have long gestation periods, and they require large investments which are ideally financed through long-term sources to ensure steady cash flow matching their long lifespan.

5. E. Cost of internally generated funds is zero.

   This statement is false. Internally generated funds, such as retained earnings, may appear to have no explicit cost, but they have an opportunity cost of capital, as they could have been distributed to shareholders or invested elsewhere.

Based on this analysis, the correct answer is C and D only, as both these statements are true and logically validated under the given context.